Transaction Fees on Bitcoin and Ethereum Fell this Spring
Transaction fees on the two largest cryptocurrencies Bitcoin and Ethereum fell by 81% and 71% respectively, over the last couple of weeks, the broader cryptocurrency market continues to descend from its recent all-time high.
The average cost of using the Ethereum blockchain dropped from $69.92 per transaction on May 11 to $20.06 on May 16. In the same period of time, Ether’s spot price both peaked as well as crashed, and it fell from an all-time high of $4,358 on Wednesday. It declined to $3,183 or 27%. Before the latest market surge, Ethereum’s current average fee of $20 would have been an all-time high by some margin.
Last year, average transaction costs were lower than $0.10. Two factors helped to increase the cost of using Ethereum. The first one was the emergence of decentralized finance apps. Currently, they make up four out of five gas burners on the blockchain. Another factor that affected transaction costs is the increased attention brought to the blockchain amid 2021’s market boom.
Ethereum’s daily user count quadrupled since the beginning of last year and reached 1.6 million from around 400,000. This number does not account for transactions that take place on Ethereum’s layer-two protocols.
Bitcoin and important details
A similar trend was observed in the case of the world’s largest cryptocurrency. Bitcoin saw its transaction feed fall 81% since mid-April when its price was close to $65,000. Average transaction costs of around $62.77 represented a new all-time high for Bitcoin, surpassing 2017’s high of $55.
The price of Bitcoin as of early Monday morning was $42,440. Its price fell by more than 30% since April’s recent peak. Bitcoin dominance, which measures its share of the overall cryptocurrency market capitalization, dropped to as low as 39.9% on May 17. It fell to 39.9% from a high of 70% in December.
While generally indicative of a swelling altcoin market, this figure can be misleading after taking into account one factor. The difference in the size of the cryptocurrency market at various times. In 2017, its market dominance was close to 90%. But at that time, the global cryptocurrency market cap was only $2 billion, or 0.1% of what it was as of May 17. Meanwhile, it is quite easy to boost the global cryptocurrency market cap. A person can launch an arbitrary token with a high supply and even just a modest starting price.